Sue Fox, @Properties. Direct 773.816.1788
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The Senate has approved a proposal that would give home buyers trying to claim the $8,000 tax credit an extra three months to close on their purchases, provided they have already met the April 30 deadline to get their home under contract.
Basically this would help clear the huge backlog of people who are all desperately trying to close their deals by June 30 in order to qualify for the tax credit, as the law now requires. Real estate deals often don’t close on time — they can be delayed by problems with the appraisal, lengthy turn-around times in lender underwriting or other wrinkles in the loan process — and right now many lenders are backed up with a swell of loans that all need to close in the next two weeks. I have one Chicago buyer who has been practically doing back-flips to get his loan approved in time, but when we asked the lender yesterday whether it would close by June 30, she said bluntly, “I have no idea.”
To take the pressure off, the Senate voted 60-37 yesterday to extend the closing deadline to Sept. 30, 2010. The extension would also apply to “move-up” buyers trying to claim a $6,500 tax credit for purchasing a home they intend to live in.
The new deadline would help an estimated 180,000 home buyers now racing the clock to close on time, several thousand of whom undoubtedly live in the Chicago area.
But the extension, if approved by Congress and the president, will only apply to people already in the home-buying pipeline. To qualify for the tax credit, you must have already signed the contract to buy your home on or before April 30.
And now for some good news… After several years of sluggish sales, condos in downtown Chicago are finally selling at a healthy clip, according to a recent report.
Downtown builders sold 256 condos and townhomes in the first quarter of 2010, up from 148 in the previous quarter and just 55 in the same period a year ago, according to Appraisal Research Counselors, a real estate consulting firm. Just to be clear, that’s nearly five times as many condos sold as compared to a year ago!
Of course, this glut of unsold units didn’t just miraculously begin to mesmerize buyers. Chicago developers chopped tens of thousands of dollars — sometimes hundreds of thousands — off their prices to attract buyers.
“If you discount, they will come,” Gail Lissner, vice president at Appraisal Research, told Crain’s Chicago Business.
For example, at 565 W. Quincy St. in the West Loop, developer Belgravia Group Ltd. slashed prices on some units by as much as 30%, sparking dozens of sales. The 241-unit project sold 59 condos in the first quarter (a period that coincided with the $8,000 first-time home buyer’s tax credit.)
Other Chicago projects also relied heavily on price discounts to attract buyers, including those at 200 N. Dearborn St., 222 E. Pearson St., the R+D359 development in the West Loop and the 38-story Silver Tower in River North.
Still, Chicago developers are climbing out of a very deep hole (Chicago Spire, anyone?) Crain’s reports that developers sold only 572 condos and townhomes in 2009 and 592 in 2008, a tiny sliver of the 8,162 they sold at the peak in 2005.
April 2010 was one of the busiest months I’ve ever seen as a realtor! Even though the government’s home buyer tax credits (in one form or another) have been in place for more than a year, there were plenty of Chicago home buyers who waited until the last minute to buy.
April 30 was the deadline for signing a home purchase contract; buyers now have until June 30 to close the deal.
I had four different buyers or sellers go under contract in the last 10 days of April alone. In one deal, the buyer made an offer on my seller’s Lincoln Square condo around 9 pm on April 29. Her realtor and I negotiated the deal until slightly after midnight, and everyone signed the contract the next morning… thereby just making the April 30 deadline. Whew!
Plenty of other real estate agents in my office, and across Chicago, witnessed the same eleventh-hour mania. Now hopefully we can all get the inspections, attorney review periods, and mortgage loans completed in time to close by June 30! Expect a similar frenzy at title companies in June as everyone piles in to close before the deadline.
We should see healthy home sales throughout the Chicago region for April, just like the 50% leap over the previous year we witnessed in March. But now that the government’s home-buying stimulus is a thing of the past, the question on everyone’s mind is… Now what?
The home buyer’s tax credit — which expires tomorrow — has certainly helped light a fire under Chicago home buyers. Home sales shot up again in March compared to March 2009, making this the seventh month in a row of year-over-year gains.
In the city of Chicago, March total home sales (single-family and condos) rose 49.7% to 1,814 sales compared to 1,212 sales a year ago, according to the Illinois Association of Realtors. For the entire first quarter, home sales were also up considerably, by 41.6% citywide.
But prices have continues to slip. Chicago’s median home price in March was $209,000, a 4.6% drop compared to $219,000 last year.
Dr. Geoffrey J.D. Hewings, director of the Regional Economics Applications Laboratory (REAL) of the University of Illinois, pointed to the latest figures as evidence of an “upward trend.” He told the Realtor’s association that “there is increasing evidence that the housing market is stabilizing; in many parts of the country sales have increased but prices remain stubborn. In places where there have been increases, they are modest; there is no doubt that the downward pressure on prices can be traced to the volume of distressed properties on the market.”
Meanwhile, foreclosures have continued to climb across Chicago and the metropolitan region. Nearly 3,500 Chicago homes went through a court-ordered auction in the first quarter, and 95% of them were acquired by the bank, according to a story in today’s Chicago Tribune.
This flood of bank-owned homes, which I’m now seeing popping up even in trendy neighborhoods like Lakeview and Lincoln Park, is depressing home prices across the board. But at last, homes are finally changing hands again at a healthy pace, and some stability is returning to our Chicago market.
Looks like home prices in Chicago have declined to the point that buying is now a better financial deal than renting, according to a front-page story in the New York Times that analyzed home prices in various cities.
“In some once bubbly markets, prices have fallen so far that buying a home appears to be a bargain,” the newspaper reported (read the full story here). Chicago — along with New York, Los Angeles, Houston, Dallas, Atlanta and south Florida — is among the major metropolitan areas where buying now makes more economic sense than renting a similar home.
A simple method for comparing buying vs. renting is called the rent ratio: the price of a home divided by the annual cost of renting a similar one. If the rent ratio falls below 20, buying becomes a better option. In Chicago, the rent ratio is now just 15.9, according to the Times analysis, lower than most of the other major cities surveyed. (In fact, only a handful of cities have ratios below 14, including such hard-hit cities as Las Vegas, Detroit and Pittsburgh.)
“In most markets, you’re better off buying,” Thomas Lys, an accounting professor at Northwestern, told the Times. “But once the ratio gets to 25 or 30,I’d say, ‘You know what? There may be a bubble.'”
In Chicago, whatever housing bubble we saw here never inflated as fast or as far as what coastal cities like Los Angeles or Miami experienced. Still, prices have fallen considerably. Chicago’s rent ratio was 24.3 in 2005.
This report backs up what Chicago real estate agents have been seeing on the ground: Plenty of smart buyers snapping up properties at great prices, and locking in low interest rates to boot.
It’s been so busy lately I haven’t had a moment to blog… But at least I have some new listings to show for it! I’m happy to present my latest listing in Andersonville, a beautiful penthouse condo at 1473 W Foster Ave. #3. Please check out the photos here.
This is truly a great Chicago condo, with many features that are hard to find like soaring 13-foot ceilings and exposed brick. The gourmet kitchen features 42-inch maple cabinets and granite countertops, and the open floor plan is ideal for entertaining. There is a huge living room with a wood-burning fireplace, a sunroom, a master bath with custom marble and a large private deck. Parking is included!
There are hardwood floors throughout, plus central air and an in-unit washer and dryer. The assessments are low and this 6-unit building has been well maintained. And this top-floor condo even has roof rights, just in case you ever wanted to build a roof deck.
The location is also ideal, right off Clark Street in the heart of Andersonville. (Of course, I live in Andersonville so perhaps I’m biased, but this neighborhood is awesome.) You’re literally steps away from Starbucks, Cheeetah Gym, the Hopleaf, Ann Sather’s, Reza’s, Andie’s, Women and Children First, Scout and a ton of other cool restaurants and shops. It is only a few blocks to the Red line, the Metra stop at Lawrence, or the lake.
Please call me at 773-816-1788 for more information. I’d be happy to arrange a showing for 1473 W Foster #3 or any of my other listings. Thanks!
For many first-time buyers on Chicago’s North Side, $200,000 seems to be a popular price point for their first home. Each year I have several clients — many of them renters in neighborhoods like Lakeview, Lincoln Park, Andersonville or Lincoln Square — who have been pre-approved for a mortgage and hope to find at least a 2-bedroom home.
So what can you get for $200,000 these days? The reality is, despite the downturn in Chicago home prices, most of the aforementioned neighborhoods will be well out of reach (at least for a 2-bedroom unit). Buyers will find themselves steadily drawn further north, to Uptown, Edgewater and Rogers Park, where prices are lower and there are more 2-bedroom condos available for $200,000 or less. (Even in Edgewater, though, there aren’t too many condos in this price range, unless you comb through the high-rises near the lake, where monthly assessments tend to be quite high.)
There are also neighborhoods further west, such as Albany Park or Irving Park, where 2-bedroom condos priced below $200,000 can be easily found.
But if you are determined to live in, say, Andersonville or Edgewater, there are certain compromises that buyers can make. In the last month, I’ve helped two sets of couples with their 2-bedroom condo search in these neighborhoods, and both came up with strategies for staying under $200,000 that involved some trade-offs.
One couple, who had lived in a rental apartment in Andersonville for several years, decided after seeing about a dozen 2-bedrooms in Uptown and Edgewater that their priority was staying in the neighborhood they loved. So they compromised on size and decided to check out 1-bedroom units that featured some kind of extra space, like a dining room or sunroom. Within a couple weeks, they found a sunny 1-bedroom condo in the heart of Andersonville that was actually bigger than some of the 2-bedrooms we’d seen, complete with a large living room and separate dining room, a good-sized kitchen, a laundry room (in-unit!) and a deck.
The other couple compromised in a different way, deciding to look at garden units that would still offer the 2-bedrooms they sought, but would be slightly below ground. We’ve seen several “English gardens” in Edgewater, Andersonville, and Uptown, which are condos only two or three feet below grade that still offer plenty of light through the windows.
Both of these buyers have managed to stay just under $200,000. But if you really want a 2-bedroom condo in this price range, and you don’t want to consider a garden unit or a high-rise, I would suggest heading further north to Rogers Park. There are lots of newly-rehabbed condos — many of them with a second bathroom — at this price point, and Rogers Park is a cool lakeside neighborhood that’s easily accessible to downtown through the Red Line or the Metra.
Check out this new listing in West Ridge: A studio condo for $28,500. Which is less than some people pay for their cars!
So , what kind of a home can you buy on Chicago’s North Side for less than $30,000? A foreclosure, for one. This condo, located at 6148 N Ravenswood in West Ridge, is also a garden unit consisting of just two rooms: a 14×10 “living room,” which appears to double as the dining room and bedroom, and a 10×10 kitchen. It’s tiny, but hey, it’s still a condo.
The building is apparently in some financial trouble. Another foreclosed condo there, a 2-bedroom, 2-bath unit, just closed for $81,ooo.
The studio is a Fannie Mae Homepath property, meaning that a buyer could enjoy special financing terms such as putting just 3% down. (Which, in this case, would be under $1000.)
And if you act fast, you could even qualify for the first-time home buyer’s credit! This is normally $8,000, but that’s only for properties priced at $80,ooo or higher (pretty much everything on Chicago’s North Side.) But for cheaper homes, the tax credit would be equal to 10% of the purchase price.
It’s finally spring, and the $8,000 home buyer’s tax credit expires in only a month! These two factors combined seem to have pushed Chicago home buyers into overdrive this year.
In February, home sales in Chicago shot up 41.5% over last February, with 1,225 condos and single-family houses sold. This marked the sixth consecutive month of year-over-year sales increases, according to a report this week from the Illinois Association of Realtors.
“The tax credit has been a tremendous help for those home buyers on the fence,” said Genie Birch, president of the Chicago Association of Realtors. “With interest rates still favorable, and a month left before the tax credit expires, those considering making a purchase should do so now to take advantage of these great opportunities while they are still available.”
Thousands of buyers are still out house-hunting in March, and I predict that we’ll see strong sales volume in the Chicago area all spring. (Prices, of course, are another story. The median home price in Chicago fell more than 19% since last February.)
I’m starting to see multiple offers on well-priced properties… even properties that have been on the market for months! The demand right now is strong, but buyers are being careful not to overspend.
Home sales are also up in the Chicago region as a whole, rising 37.5% in Cook County in February.
The pain is spreading. We’ve already seen developers resort to condo auctions downtown to finally rid themselves of unsold units, but now the fallout from Chicago’s condo implosion is spreading north to the Gold Coast.
The developer who converted a 391-unit apartment building at 1400 N. Lake Shore Drive into condos in 2006 just announced an April 25 auction to sell off 30 of the 80 remaining units. “People are going to get a great deal,” Robert Mosky, president of RDM Development & Investment LLC, told Crain’s Chicago Business. “It’s going to help out the building.”
Help out the building? Mosky said that bidding for studios — that once sold for $140,000 to $160,000 — will now begin at $50,000. One-bedroom condos will start at $90,000, a devastating reduction from the original prices of $250,000 to $270,000. This may be an attractive deal for new buyers who value the location, but these fire sale prices will hardly help out the rest of the building’s owners, many of whom are likely now underwater on their mortgages.
With Chicago condo sales sluggish (particularly downtown), some developers are turning to auctions as a last resort to jumpstart sales. It’s so hard to get a condo loan these days in buildings with many unsold units that auctions — where the financing is already lined up for potential buyers — can help get people in the door. Then, the hope is that other buyers will be able to qualify for conventional loans to buy the remaining units.
But at 1400 N Lake Shore, trouble has been brewing for months for many existing owners (see my Dec.16 post). There are now at least four condos being offered as short sales in the building, and many more for sale with price tags well above the planned auction prices.
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- More choices ahead for Chicago buyers as rally cools